Broker SP Angel has set a 0.08p price target for Quantum Helium (QHE ), after the company announced that the Bureau of Indian affairs had granted it operatorship of the Sagebrush project in Colorado.
Quantum is now free to commence an extensive well-testing programme, and has scheduled the initial work to begin just after Easter.
“We maintain our speculative buy rating and target price of 0.08 per share, which is based on our updated risked NAV,” SP Angel wrote.
“An independent resource evaluation confirmed the Sagebrush project as a technically credible helium project with 2U gross prospective helium resources of 134mmcf, which increases to 269 mmcf in the 3U case. The upcoming well test is designed to validate the resource estimates, provide data to de-risk the project, and contribute to the facilities planning required to unlock the full potential of the Sagebrush project towards commercialisation. This independently verified helium resource forms part of Quantum's wider Colorado portfolio, which now totals more than one bcf of 2U gross helium resources across the Sagebrush and Coyote Wash projects in Colorado.”
Quantum’s shares are currently trading at around 0.04p.
SP Angel also noted the broader macroeconomic outlook which, despite major uncertainties, has turned favourable for Quantum.
“The advancement to testing at Sagebrush comes at a time of increasing global focus on helium supply security, with recent geopolitical developments in the Middle East disrupting a significant portion of global production leading to greater recognition of domestic capacity, particularly in the United States,” the broker said.
“We expect a steady stream of news flow in the coming months to validate Quantum’s resource estimates and further de-risk the wider portfolio, as well as providing the data needed to advance targets towards drill ready status in 2026. Following positive results from the extended well test, we think that investors could look beyond our target price by attaching greater value to the wider prospectivity in the portfolio, subject to the timing of the forward drilling programme.”
SP Angel’s long-term assumptions include a long-term helium price of $450/mcf (98% He content) and a US$70 per barrel oil.
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Worth noting that SP Angel specifically leaves room on the upside in setting out its price target. The 0.08p target is based on a risked valuation, but the price could go higher following significant de-risking milestones like flow-testing. The unrisked valuation is set at 0.3p per share.